Auto industry consolidation: Marchionne and the rest of the world

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Sergio Marchionne, the chief executive of Fiat Chrysler Automobiles has been eager to claim large-scale consolidation in the global auto industry is the way forward. But so far his call to arms has gone mostly without any positive response, especially considering that his main target of “partnership” – larger US rival General Motors – has not even agreed to a face to face meeting to discuss such an idea. Meanwhile, Marchionne goes on undeterred claiming the auto industry sees competitors throwing away billions and lowering shareholder value. His belief is that consolidation today will help them fend off potentially “disastrous consequences” on the long run. Despite his grim predictions, senior GM executives have constantly refused to meet him and during the Frankfurt auto show last month, GM CEO Mary Barra commented that managers inside and “expert advisers from the outside” have examined the proposed partnership. “We’ve looked at it very, very carefully and in tremendous detail. And it’s not in the best interest of General Motors shareholders,” Barra said then. Certain automakers do share to a point Marchionne’s vision, with Renault-Nissan CEO Carlos Ghosn forecasting “smaller carmakers will need alliances and cooperation with bigger players”, while PSA Peugeot Citroen chief Carlos Tavares claims “The new norm is frugality: to do more with less,” as the advantage of size needs to be carefully balanced with the prospect of agility. Volvo Cars purchasing and manufacturing head doesn’t consider size such a massive advantage today, pointing out to the incredible bankruptcy of General Motors, once the largest automaker in the world. Via Automotive News Europe